In Ubuntu 10.04, when using "Hardware Drivers" to install the appropriate proprietary driver "nvidia-current", the installation process does not properly install the nvidia version of libglx.so in the path /usr/lib/xorg/modules/extensions. The workaround is to copy libglx.so for the path /usr/lib/nvidia-current/xorg to the extensions path specified above as it is a link to the correct module. The result of the incorrect libglx.so module is not being able to use gnome desktop effects. In the xorg.log file one will also indicate that the libglx.so module was not load because its not compatible to the nvidia driver,

I installed the drivers via hardware drivers and didn't face this issue, desktop effects work fine and so does Google Earth and other programs needing hardware acceleration, also VDPAU works well on my nvidia 8400GS. I did update it to latest beta via xswat ppa and it works well too.